Next week will see the first serious attempt by WTO officials and cabinet-level negotiators to draft decisions by the Hong Kong Ministerial Conference. Agriculture remains a lynch-pin: as indicated by the reports that the Five Interested Parties (FIPS) will meet in London to try to bridge differences face-to-face that they have already spelled out over video-conferences in the past week. I do not believe that they can yet bridge the gap on the ‘headline’ tariff-cut number, but there are three or four other items they need to nail down.
The gap between the US/Cairns/G‑20 demand that the EC lift its tariff cut offer from an average 39% to an average 54% (or more) is too big to bridge right now and I believe that neither the USA nor EC wants to force this issue … yet. One reason is that forcing the point of disagreement means a possibly mortal wound to the negotiations. Experience tells the negotiators that if you hammer home the sharpest disagreement, all you get is blood; not an agreement.
But, there are at least two more reasons. Both sides know they have more time (at least until the end of the first quarter next year) and plan on using the pressure of the real last days to extract concessions; from their interlocutors, of course, but also from the intransigent groups in their own domestic lobbies. Also, they want to use that time to probe further for advances in their own objectives and concessions from the other side. The USA wants to see developing country pressure build up for more concessions from the EC. The EC could use more time to secure a substantial ‘supporting deal’ on Geographical Indications (GIs) and to pressure the USA over anti-dumping measures (both mentioned in its proposal on 29 October) and its narrow concessions on the trade of the poorest countries (the ‘least developed’).
They cannot, however, let Hong Kong slip by. First, there’s too much to decide to leave everything until next May or June (my guess for the ‘last days’). There must be some interim steps taken in December. Second, there’s the credibility issue. They have the same pressure operating on them in Hong Kong as they felt post-Cancún to come up with a credible set of decisions that conveys assurance that the negotiations will conclude before they run out of time ( really out of time).
There is no agreement until everything is agreed: so anything done in Hong Kong remains ad referendum to the final package. But it’s time some things were put away. My list for the ‘must do’ at Hong Kong, on agriculture at least:
- Sensitive products: there must be more clarity around the number (proportion of tariff lines), ‘flexibility’ and the general formula. There is a chicken-and-egg conundrum here between the degree of protection for ‘sensitive’ products and the size of the tariff cuts. But some more clarity is needed on the mechanisms for the expanded use of tariff-rate-quotas as an offset for smaller tariff cuts affecting these products. The EC’s proposals have been roundly dismissed by the USA, Cairns Group and the G‑20, but there must be more concreted provisions made in Hong Kong
- Special products: the developing countries who want to have products where there will be low-or-no access improvements (for specific, development-related reasons) have failed, so far, to produce any details on the product list, the means of selection or the exceptions that will apply. They must come up with the goods in Hong Kong or see their claims loose all momentum
- Elimination of export subsidies: a schedule for elimination of all forms of export subsidy and details on the food-aid ‘anti-circumvention’ measures must be agreed, or mostly agreed, to get these less controversial (but still hot) issues out of the way.
- Domestic support: cuts in de mininmis support levels, ‘blue box’, and the headline AMS (‘amber box’)measures. The gaps here are, frankly, small enough. They can be bridged ad referendum, particularly since most of the horse-trading will come when the national schedules are presented and verified in the months following an agreement.
Three things that would be Nice To Do at Hong Kong (but will probably wait until the last minute):
- Geographical Indications: the poorly-reasoned decision of the European Court last week (press release, PDF file about 160k) verifying that the Commission acted within its powers in granting a ‘Protected Designation of Origin’ to Greek feta cheese—thus forbidding the Danes who have made and marketed feta since the 1930s (and the French, and the Germans) from continuing to use the name—has apparently re-awakened the Commission’s flagging fervor for GIs. The EC’s claims have inflated to the point where they now demand not only that agreement be reached on a legally-binding international register of GI’s (to protect their 7–800 GI’s) but that the extended protection given to wines and spirits names should be now provided for ‘all products’. Only the register decision figures in the Doha negotiating mandate, however. Although the EC on the one hand and the USA, Australia, Argentina and others remain diametrically opposed, there are subterranean proposals that may bridge at least the ‘register’ issue. It may not be possible at Hong Kong, but it would be good to put it away.
- Special Safeguards: the EC and the G‑10 persist with demands for access to a ‘Special Safeguard’ that would allow already-high protection to be increased if there were signs of import competition while the tariff cuts were being implemented. Never mind that this is what the Agreement is supposed to achieve. If the SSG is approved at all, it should be on a strictly limited basis with a strictly limited time-frame and should not be available on ‘sensitive’ products that would already benefit from additional levels of protection.
- Due restraint: the ‘peace clause’ that both the EC and USA want to immunize them from disputes action during the course of the subsidy elimination phase. The US attempt to claim a ‘peace clause’ cover for it’s cotton subsidies should leave it with few friends on this issue—apart of course from the EC.